Drilling at AK6
in Botswana
 
London, England — MININGREVIEW.COM — 05 October 2010 – London and Botswana-listed African Diamonds Plc (AFD) “’ a diamond exploration company with an exciting portfolio of projects in Botswana and the DRC “’ has received a takeover offer from its senior partner in the AK6 diamond mine in Botswana, TSX-listed Lucara Diamonds.

AFD reported yesterday that it had received the offer from Lucara valuing the company at 51p a share – a 27% premium to the closing share price on 1 October.

The offer consists of 0.8 of a Lucara share and one share in a new diamond exploration company – Botswana Exploration Plc – for every single share held in AFD. The total value of the transaction is US$80 million (R560 million).

Botswana Exploration will hold all of AFD’s interests, except for its 40% stake in AK6 in which Lucara already owns the other 60%.

The new company will be listed on the AIM and the Botswana Stock Exchange, and, in terms of this deal has a directors’ valuation of 7p per AFD share.

Those interests include US$2.9 million (R20 million) in cash; exploration ground in Botswana including the AK8, AK9 and BK5 kimberlite pipes; advanced stage diamond licence applications in the Marange area of Zimbabwe; and licence applications in Cameroon, as well as indirect exposure to diamond plays in West Africa and the Democratic Republic of Congo (DRC).

The AFD board has unanimously recommended the proposal, subject to shareholder approval.

All AFD directors have irrevocably agreed to vote their shares in favour of the proposal, but the AFD board has the right to end the arrangement through payment of a US$1 million (R7 million) “break fee” to Lucara should there be an unsolicited superior offer.

Miningmx reports that AFD managing director James Campbell may opt out of Botswana Exploration and move to Lucara. “That’s under discussion with Lucara at the moment,” he said. “There’s nothing final at this stage, but I may not be part of the exploration company.”